Is it legal to use a federal student loan to put a downpayment on a house?
I'm going to be a graduate student. I'm hoping to buy a 3 - 4 bedroom house and rent out the other rooms to fellow students. I don't have quite enough money for a downpayment. could I use part of my federal student loan for this? Are there restrictions on what student loans can be used for?- I never thought about that. I used mine to buy a car and no one ever came after me. But be sure they did not give you too much. Someone I know did the same thing, and when she applied for the next year they found out that she got too much money last time, so she did not get as much as she needed for the next year. But I say go for it
- Tough question. On one hand, your financial aid is supposed to help you cover your housing expenses - but, on the other hand, you are not allowed to buy a car with it. I'd have to say no - unless you only need a very small amount of money from it toward the downpayment
- It's my understanding that you can use the money however you want to. I used part of my student loan to pay for a car because I needed one to get back and forth to school. As long as you pay it back when you're supposed to, I believe you can use it for whatever you want
- It think the answer is slightly that is it's slightly legal. Federal student loans are suppose to pay for educational expenses, such as tuition, books, food, transportation, house and others. The loans were not intended for downpayment istance, but they were intended to help with housing. Since a house would be housing it technically would be legal. Furthermore, the feds do very little follow - up and of all the other things you could have spent it on this would be a better choice than say Plasma TV. That having been said, here's why I do not think it will work. 1st the loan is not going to come in a large chuck, but will probably be split per semester. Since you're a grad student you will be able to borrow a lot 18k this year 20k next, but after it pays for tuition, I doubt that you will have much more than 7k per semester left - over to help with a down payment. Let's say that is just enough to make it. 2nd you then will not have any of the refund money to pay the mortgage payments, buy groceries, pay for utilities, fill your car with gas, etc. Now, there are two ways around that, get a job and / or get paying roommates. The first, job, could cause challenges with accomplishing school work, and it's tough to stay in grad school with a less than 3. 0 gpa. The second could be inconsistent; I rarely had, or heard of, 3 - 4 roommates that were always good for the full rent on time. You're putting yourself in a risky situation, make sure there is a possible reward
- Half of the Student Loan is meant to help you to live, room and board; while the first portion goes to the collage or school. I do not think there will be any repercussions from using your part towards housing. You are the person responsible to pay the loan back, so I do not think if you use it for your shelter as it is meant, that there will be any problem. Never heard of anyone asking "what" you did with your portion! Only demands for payback!
- yes it is
- it can count as part of your "living expenses" so no i do not think its illegal
- This is illegal!
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